The attrition rate is like peas in a pod, and staff retention is the pod; they go together like peas in a pod. Even though they are not the same, businesses must address them all together.
When employee retention is low, there is a problem: Happiness is down, engagement is off, or perhaps the economy is booming, and employees are leaving for better opportunities. However, if staff attrition is excessive, you may not necessarily have an issue, but you do need to handle it.
What is the attrition rate?
The rate at which employees depart an organisation is known as the attrition rate. The attrition rate counts the number of people who leave voluntarily or involuntarily. It is frequently reported as a percentage and is one of the critical data points that HR monitors to learn more about the state of a firm.
Why are attrition rates important?
Let’s explore the significance of tracking attrition rates now that we understand what they are better. In other words, attrition rates indicate what HR management must know: how many individuals depart your company.
People leaving is, in a sense, anticipated and typical. However, if your attrition rates are incredibly high, it can be a sign that your people strategy needs improvement. And if you lose good employees, especially if it’s difficult to find replacements, you won’t be able to work efficiently to meet your business goals.
Not to mention that replacing an employee can cost up to nine months’ worth of that person’s income, according to some estimates.
Also Read: Salary Breakup
How can you calculate your employee attrition rate?
To determine attrition, divide the average number of departures in a particular time by the average number of employees in that period, multiply by 100, and then divide that result by the total number of employees in that period.
This shows how many people are still present following departures or how much workforce you’re losing. Remember that your attrition calculation does not account for turnover or employee retention; instead, it assesses how quickly and effectively your company can find replacements for those who leave.
Attrition vs retention
What precisely separates attrition from retention, then? The retention rate measures the percentage of workers who continue to work for a company over a given period. Attrition measures, which count the number of workers leaving the organisation, are the inverse.
The fact is that retention is a complicated indicator that, by itself, doesn’t reveal anything about the state of a company. To comprehend the subtleties, we must go deeper into retention data, including turnover and attrition.
Because whereas retention informs us how many individuals leave, attrition tells us what that means for the company. Because attrition isn’t a measure of headcount—it’s a measure of strength.
Attrition vs turnover
The distinction between attrition and turnover is more complex. In reality, the two names are frequently used interchangeably. However, the two terms are not identical.
Individuals frequently perceive turnover as a short-term problem, with the solution of immediately employing new people to fill the void created by those departing being a temporary remedy.
On the other hand, Attrition is a long-term concept that focuses on how many individuals leave over more extended periods and seeks to employ big-picture, strategic thinking to solve more significant organisational challenges.
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